UPDATE 1-Canada's economy contracts in Q2 as recession hits

OTTAWA, Sept 1 (Reuters) - Canadian economic activity shrank
again in the second quarter, putting the country in recession
for the first time since the financial crisis with the cheaper
price of oil taking a toll as business investment fell and
inventory accumulation slowed, data from Statistics Canada
showed on Tuesday.

Gross domestic product contracted at an annualized 0.5
percent rate in the second quarter. While that was better than
economists' forecast for a decline at a 1 percent rate,
revisions showed the first quarter's contraction was 0.8
percent, steeper than first reported.

Two consecutive quarters of contraction are typically
considered the basic definition of a recession and the Bank of
Canada has cut interest rates twice this year to try to revive
the economy. The last time Canada was in recession was in
2008-09 following the global credit crisis.

Still, economic activity in June grew by a
better-than-expected 0.5 percent, the first monthly increase in
six months and a sign that growth may have started to recover at
the end of the second quarter. That bodes well for expectations
that the recession will be short lived, with the economy growing
again in the third quarter.

In the second quarter, business investment sank by an
annualized 7.9 percent as spending on non-residential
structures, machinery and equipment fell. Inventory accumulation
slowed by C$4.91 billion ($3.74 billion).

By industry, activity in the goods-producing industries
declined 2 percent on a quarterly basis, including a 4.5 percent
drop in the mining, quarrying and oil and gas extraction
component.
($1 = 1.3138 Canadian dollars)
(Reporting by Leah Schnurr; Editing by Andrea Ricci)